tag:blogger.com,1999:blog-7608702.post7537351606969672168..comments2023-10-25T08:46:20.242-05:00Comments on The Distributist Review: Chapter VII: The Fictitious Commodities: MoneyJohn Médaillehttp://www.blogger.com/profile/16463267750952578888noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-7608702.post-75671442677609269312008-11-09T17:31:00.000-06:002008-11-09T17:31:00.000-06:00"As to the Fed, its very existence concedes that t..."As to the Fed, its very existence concedes that there is no "market" way to control the money supply. The central bank control of the money supply replaced the gold standard nearly 100 years ago. So in that sense, the debate over "planning" ended in practice a long time ago, even though it continues in the rhetoric."<BR/><BR/>It seems to me though that the market was thwarted by political power. I had the liberty dollar in mind when say this.Unknownhttps://www.blogger.com/profile/00974532958059972267noreply@blogger.comtag:blogger.com,1999:blog-7608702.post-33953260033442370612008-07-29T11:00:00.000-05:002008-07-29T11:00:00.000-05:00Anon, I agree with your comment. If the rate of in...Anon, I agree with your comment. If the rate of interest is materially above the general rate of profit, then it constitutes usury. This was the opinion of both Thomas Aquinas and J. M. Keynes.John Médaillehttps://www.blogger.com/profile/16463267750952578888noreply@blogger.comtag:blogger.com,1999:blog-7608702.post-22846429933456079462008-07-22T19:55:00.000-05:002008-07-22T19:55:00.000-05:00I thought it was excellent again.My only small cri...I thought it was excellent again.<BR/><BR/>My only small critique was the definition of usury. I can certainly agree that some interest on money lent for productive purposes is not usury due to the risk and perhaps loss of use of the money. <BR/><BR/>However some is not today, state restrictions on banking which limit credit and the sheer power of financial institutions means the interest rates are far higher than they should be and therefore even some returns on productive loans can qualify as usury.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7608702.post-46064020913703581742008-07-15T13:36:00.000-05:002008-07-15T13:36:00.000-05:00Sept-7. Food and oil are difficult to store. Food ...Sept-7. Food and oil are difficult to store. Food is especially susceptible to shrinkage, spoilage, and pests. That was one of the reasons for choosing gold and silver; they are easy to store (if hard to carry). The other reason is that they make counterfeiting pointless. It was never the case that they were chosen as commodities. In fact, the choice of gold and silver is not universal. China and other societies always relied on bronze.<BR/><BR/>The current markets give us the weakness of a commodity currency. Oil has gone from near $20/bbl to over $140, with many ups and downs in between. You would have to consult a newspaper each morning to find out what you money is worth. No one can do business under those circumstances. <BR/><BR/>And you have the same supply problem. If oil is money, then the supply of money is unrelated to the need for money. There can be too much or too little at any given time. There is no way to make money a commodity. Even if you use a commodity as money, you will still have all the problems of a fiat currency, plus some extras. Money will always remain a fictitious commodity.<BR/><BR/>More promising is the idea of local currencies. There are lots of arguments in favor of them, but on this issue, if some locality decided to trash its own currency by overprinting, then people would rush to other currencies. Local currencies also reflect local economies, and the differences in currencies provide an automatic system of tariffs and subsidies. National and international currencies disadvantage weaker economies in favor of stronger ones. The weaker economy losses the natural system of tariff/subsidy that local currencies would provide. Instead, the weaker country simply becomes a source of cheap labor and materials for the stronger ones, without receiving any real benefits in return.John Médaillehttps://www.blogger.com/profile/16463267750952578888noreply@blogger.comtag:blogger.com,1999:blog-7608702.post-90810354395985407502008-07-15T04:01:00.000-05:002008-07-15T04:01:00.000-05:00Thanks John for your response (sorry about forgett...Thanks John for your response (sorry about forgetting to post my usual handle).<BR/><BR/>I can see your point about the need to estimate the amount of calories that go into production but it would seem to be something we could judge with more accuracy than a banker judging the potential productive capacity of an individual who's filed a few forms for a loan and nowadays probably never met the individual.<BR/><BR/>As for the depositing issue, the reason I choose calories is because they are so easy to deposit mainly in the forms of food and fuel but other products can also have direct caloric output. <BR/><BR/>The bigger issue was relating to your statement that some services require very few calories but produce great wealth. I'm not really seeing what you mean unless you are talking about the arts and software aka information production based wealth. But for most of the planet that lives on less than 2 dollars a day I don't think they would consider those things primary. So for national currency for big country like the United State I think this would work better than current system.<BR/><BR/>As a commodity based currency idea I thought it was a good idea but I think it would work better in local economies that depend on higher calorie based wealth. A town of musicians and writers would probably have a hard time with the calorie model but a town of steel producers would take to it quite well I think. <BR/><BR/>America used to have many local currencies and its a pity that the Fed system is used to undermine that kind of local control.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7608702.post-26129020128300845242008-07-14T09:34:00.000-05:002008-07-14T09:34:00.000-05:00Anon, it is not the size of the total economy, but...Anon, it is not the size of the <I>total</I> economy, but only of the exchangeable economy, the goods and services actually offered for sale. Calories at first glance seem an attractive alternative if someone wants a commodity-based currency. However, upon examination it has the same problems as any commodity. One still has to make a judgment about how many calories are being consumed in production. Then their is the problem of redemption. The whole idea of a commodity currency is that the currency can be redeemed for the commodity. But how do you deposit calories in Ft. Knox? How do you redeem them? Finally, calories relate well to some forms of production (like making steel, for example) but not to others. Some services require very few calories but produce great wealth. <BR/><BR/>There is not way to avoid making a judgment about the amount of new money needed; there is no way to make it an automatic process. Once we realize that it is a judgment, although one at least guided by at least some data, then we know which intellectual tools to use when making the judgment.John Médaillehttps://www.blogger.com/profile/16463267750952578888noreply@blogger.comtag:blogger.com,1999:blog-7608702.post-6020469204747323922008-07-14T08:43:00.000-05:002008-07-14T08:43:00.000-05:00Quote from John: "We rely on the prudence of banke...Quote from John: "We rely on the prudence of bankers to lend only for productive purposes, and so increase the money supply no faster than the productive capacity of the nation. However, the bankers cannot be perfectly prudent, because no one perfectly knows the future, and repayment is dependent on what happens in that unknown realm."<BR/><BR/>Are you saying productive capacity of the physical economy where the wealth is present should be be related to the size of the money supply? Are you saying the problem with the fiat system is that banker misjudge the relationship between the two? <BR/><BR/>The reason I ask is because because you then go on to point out the problem with the physical gold standard also not keeping balance between physical economy and the money supply. <BR/><BR/>I understand the problems with the gold standard but there seems to be a simple solution that can never get too far off from the physical production capacity. Why can't we just peg the value the monetary unit to 1k calories and be done with it? I mean it's not like we can avoid using calories an any mode of production (unlike gold) so why not us it as the standard?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7608702.post-43343812184921057902008-07-08T09:48:00.000-05:002008-07-08T09:48:00.000-05:00Viking, in regard to war and economics, my belief ...Viking, in regard to war and economics, my belief is that in order to induce men to risk their lives in war, they have to be convinced that there is a higher-order principle at stake. But in order to induce gov'ts to go to war, they have to be convinced that there is an economic advantage to doing so. Was the Trojan war fought because Paris had violated the marriage bed, or because Troy had a choke-hold on the grain routes? The answer is "yes" to both.<BR/><BR/>As to the Fed, its very existence concedes that there is no "market" way to control the money supply. The central bank control of the money supply replaced the gold standard nearly 100 years ago. So in that sense, the debate over "planning" ended in practice a long time ago, even though it continues in the rhetoric. <BR/><BR/>Nothing is more amusing to me that to hear pundits proclaim the "free market" and then say, "...and the Fed ought to (lower, raise, bail-out, etc.)" If one really believes in a free market, the first step is to abolish the fed. But then, what happens to the money supply? The Gold Standard? Been there; done that; got the T-Shirt and it says "depression." Let the banks create as much money as they want? The Wiemar Republic did that in the early 20's. I have stamps from that period in which a five-mark stamp is over-printed with "5 Billion Marks." 5 Billion to mail a letter. I suspect we don't want that.John Médaillehttps://www.blogger.com/profile/16463267750952578888noreply@blogger.comtag:blogger.com,1999:blog-7608702.post-32876230247862499802008-07-08T07:25:00.000-05:002008-07-08T07:25:00.000-05:00Hello all, I'm back from a trip, y'all miss me? W...Hello all, I'm back from a trip, y'all miss me? Well, hopefully your responses will at least not be in the terms which the baker in the last chapter directed at the wheat farmer who wanted to charge him use-value!<BR/><BR/>John, I found this chapter quite fascinating. I have a question about it which I'll get to in the next paragraph, but I did wonder about your statement that the confusion between "foundational" and "excellent" goods causing most wars. Do you mean that most wars are economic in origin? I'm inclined to doubt that, but if you meant something like rulers transmuting the virtue of genuine public service into the vice of power-hunger, then I'm far more agreeable, for whatever that's worth.<BR/><BR/>Now for my main question, about which I'm genuinely confused. For some time now, I've puzzled over the fact that the US Fed sets interest rates by something called the "prime rate". Puzzled, because everywhere else in the markets you only ask for trouble when you set prices rather than respond to ever-changing conditions. I concluded that it must have something to do - I wasn't sure just what - with the banks' money-creating perogatives. Your discussion of the credit market brought me up short. Are you saying that the peculiarity of the credit supply-demand curve - S and D never intersecting - is the reason for this hard-to-explain Fed power? Or is it a combination of the two, money-creation and the non-intersection?<BR/><BR/>Best,<BR/>VikingVikinghttps://www.blogger.com/profile/06660688426762417651noreply@blogger.com