Money: the sacred object of court systems of organized coercion

JM:

A sound money provides economic prosperity and a small limited government.
Unsound money provides for inflation, recessions, depressions and a big, progressive, over reaching government.

Thomas Jefferson and Andrew Jackson understood “The Monster”. But to most Americans today, “Federal Reserve” is just a name on the dollar bill. They have no …
  • J R Fibonacci Hunn I see your slogans, but no clarity or respect. What is “sound” or “unsound?” 

    I know what money is. I still sense that you do not get the simplicity of it. Without respect, there is much room for confusion and not so much for clarity. 

  • JM: One in which the measure of underlying value (whatever it be) as a medium of exchange can’t be easily manipulated.

  • J R Fibonacci Hunn Why would a government ever do that? You misunderstand the whole premise of legalizing a currency as the approved form of payment within a particular court system’s jurisdiction. 

    When an operation of organized coercion (a court system) invents tax liabilities and tariffs and fines etc, that creates a concern in the public for avoiding the violence of the court system, such as arrest, garnishment, and rituals of human sacrifice. How can the public avoid the violence? The court system dictates a particular form of payment as the acceptable form of payment in discharging the legal debts invented by that court system.

    What does that ALWAYS do? It produces public demand for the sacred form of payment.

    When the US Confederacy no longer operated their system of organized violence (or even when people started to doubt the future effectiveness of their court system as the Union militatry first invaded and then began to occupy the South), what happened to demand for the currency? If the intimidation produced by the Confederate government started to weaken (as people began to be more intimidated by the Union’s coercive capacity), then demand for the Confederate currency fell… eventually to zero.

    In the case of a written contract, if you cannot intimidate the other party in to compliance and you do not have faith in the court system to enforce it coercively, then the contract is worthless. Or, if you have a contract saying that I owe you 50 million barrels of oil per day for the next year, that contract is also basically worthless- even if the court system COULD enforce it. Why? Because I would not be able to provide that much oil to you.

    Sacred shapes of ink on paper are irrelevant without military force OR at least some practical political leverage (like two partners of a very specialized business that both really need each other to succeed can expect cooperation and partnership). As for the subject of metal coins, your “easily manipulated” comment is still an issue.

    What is THE primary way that governments manipulate demand for currency? It is the altering of the process of inventing liabilities. If 1,000 new acts are made illegal with huge penalties, that increases demand for the currency (creating a de facto “deflation”). If tax rates are lowered 50%, that produces basically a 50% decrease in demand for the currency.

    Obviously, there are more complex issues like using military intimidation to have a particular currency be used for pricing an important commodity, such as oil (but certainly not gold, which is of no great importance as a commodity to most people in the world). A “classic” modern case of the immense manipulation of demand for a commodity is the PR guru Edward Bernay’s program to deceive the public (in the US and elsewhere) in to valuing diamonds far in excess of the “natural” value. He pioneered the methods used to deceive the US public in to supporting US entry in to World War 1 as well.

    Those same methods are still used to dramatically balloon the sentimental demand for commodities with no great practical importance, such as gold. Among many countries, the masses are programmed to have religious and patriotic loyalty to the idea that gold has some special inherent value. Of course, that is contrary to some of the most basic observations of “Austrian Economics,” such as the fast-changing “ordinal value” of all assets.

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One Response to “Money: the sacred object of court systems of organized coercion”

  1. Thomas La Grua Says:

    I often say that if you can’t live in it or eat it, it’s not an investment but a gamble. A new digital currency would be cool if it were aligned to real exchange such as an hour of human labor.

    Currencies such as Bitcoin and gold are not the answer either because, they too are of the wasted energy of mining the gold or the Bitcoin.

    What humanity requires (I would say) is new money that is aligned to one value that applies equally to all humans. It will be interesting to see how “reset” is to be defined.

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